The flexible-budget variance for variable costs is

ACCOUNTING

Multiple Choice

The actual information pertains to the month of August. As part of the budgeting process Alloway’s Fencing Company developed the following static budget for August. Alloway is in the process of preparing the flexible budget and understanding the results.



Actual Flexible Static

Results Budget Budget

Sales volume (in units) # 20,000 # 25,000

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Sales revenues $1,000,000 $ $1,250,000

Variable costs 512,000 $ _________ 600,000



Contribution margin 488,000 $ 650,000



Fixed costs 458,000 $ _________ 450,000

Operating profit $ 30,000 $ $ 200,000


The flexible-budget variance for variable costs is

a. $32,000 unfavorable

b. $120,000 unfavorable

c. $32,000 favorable

d. $120,000 favorable

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